Co-payment: Should you opt for it?
Co-payment gives you an option to reduce your health insurance premium by agreeing to pay a certain percentage of hospital bills at the time of claim.
The health care cost has been swelling in the country at the rate of 15-18% per annum. Recently, hospitals have also increased their tariff rates post the second wave of covid-19, which would ultimately lead to an increase in premium rates of your health insurance policy. However, a family’s budget has also been shrinking because of a slowdown in the economy. In such a case co-payment is one of the ways to reduce your premium rates.
Co-payment is the feature in which you pay a certain percentage of hospital bills from your pocket while the rest is paid by the insurance company. By opting for co-pay you can substantially reduce the premium rates of your policy. The rule says the higher the co-pay the lower the premium will be in a similar proportion. Hence, if the policyholder opts for 20% co-pay then the premium rates will also go down by 20%.
What you should know
The feature is helpful for those who find health policies very expensive and decide not to opt for one. Co-payment gives a buying option instead of not having a cover at all. Considering policies for senior citizens are generally very expensive. co-payment can be an option for them to reduce their premium rate while staying covered at the same time. The percentage of co-pay depends on the paying capacity of the policyholder. However, experts say 10-15% of co-payment is advisable as it is not very expensive to maintain at the time of claim settlement and keeps premium also in control.
Health fund
One of the important points to keep in mind is to create a health fund for meeting the deficiency in case of hospitalisation. It should be used only for any medical emergency. Since the fund has to be liquid in nature, it is advisable to park your money in fixed deposit or ultra short term debt funds.
Most importantly, generally, the option to remove the co-payment or deductible clause from the existing policy may not be there. So, don’t forget to study the policy terms and conditions closely before signing up for a new cover or renewing the existing one. Though co-payment and deductible help in reducing premiums, but they also reduce your claim amount at the time of paying the hospital bills.
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